Dáil Éireann Debate, Thursday - 14 October 2004
72 Mr. O’Shea asked the Minister for Finance the progress made to date with regard to the commitment given in An Agreed Programme for Government to remove all those on the national minimum wage from the tax net; the steps he intends to take to ensure that this commitment is honoured; and if he will make a statement on the matter. [24660/04]
View answerThe Deputy will be aware that the Government programme, An Agreed Programme for Government, states that "over the next five years our priorities...will be...to achieve a position where all those on the minimum wage are removed from the tax net". The five year period mentioned commenced when the Government was elected to office in 2002. It is also the case that the commitment to exempt the minimum wage from tax is given in the context of a broader economic and budgetary strategy which provides, among other things, that the public finances will be kept in a healthy condition and that personal and business taxes will be kept down in order to strengthen and maintain the competitive position of the Irish economy. The current national partnership agreement Sustaining Progress contains a commitment in generally similar terms.
The statutory minimum wage is an average hourly rate of gross pay for an employee as defined under the National Minimum Wage Act 2000. The wage currently stands at €7 per hour having been increased on 1 February 2004 from the previous amount of €6.35 per hour. The annualised equivalent of the present minimum wage is just under €14,200.
As the Deputy will be aware, it was the present Government who legislated for the introduction of the statutory minimum wage which came into effect in April 2000. At that time less than 64% of the annualised figure of €11,330, £8,923, was exempt from taxation. In budget 2002, 90% of the minimum wage became exempt from tax and this position has been maintained in budgets 2003 and 2004 even though the minimum wage has increased twice in the intervening period. Currently, the position is that a single PAYE person may earn up to €12,800, that is, 90% of €14,200, without paying tax.
The Government has made clear that it intends to complete its programme over the remainder of its term of office and I will be addressing the exemption of the minimum wage from taxation in that context. However, the question of when those earning the amount equivalent to the statutory minimum wage annualised will not be liable for income tax is a matter for consideration in the context of the annual budgets over the next number of years consistent with the Government's overall economic and budgetary strategy.
